Pardon me, I'm Canadian...and I'm not entirely sure I understand the entire American economic system...but how is it that the largest savings and loan bank in America, with assets in the billions, can go bankrupt so quickly?
I'd seen their ads on TV, and I kept wishing we had a WaMu in Canada.
I know more about operating forklifts and other equiplent than stuff than economic matters, so can anyone explain it?
Originally posted by OliverPardon me, I'm Canadian...and I'm not entirely sure I understand the entire American economic system...but how is it that the largest savings and loan bank in America, with assets in the billions, can go bankrupt so quickly?
I'd seen their ads on TV, and I kept wishing we had a WaMu in Canada.
I know more about operating forklifts and other equiplent than stuff than economic matters, so can anyone explain it?
I am not an expert, but let me my meager understanding. Banks in general have only a fraction of their assets in cash. All numbers included here are as of June 30th, 2008, the last information available from the FDIC. As of that date, WaMu had $307 billion in assets. $5 billion of that was cash. $233 billion of it was from money owed to them from loans. Meanwhile, they had $282 billion in liabilities. The majority of this is the $188 billion that customers had in deposits in the bank.
Now, because of the difficulties in the subprime mortage market (short answer: banks giving mortage loans to people they shouldn't have), the bank was not doing well financially. They had laid-off 6,000 employees (12%) in the last year. They had $10 billion in noncurrent loans (30-90 days past due), up $6 billion from a year ago. So these customers see that the bank isn't doing well, and they start taking their deposits out. For most people, this wasn't at all necessary. Deposits up to $100,000 are guaranteed by the Federal Deposit Insurance Corporation. Indeed, 76% of WaMu's deposits were insured. This withdrawal of money only exacerbated the problem. Lack of consumer confidence can criple much of the financial market. This continued to spiral until the government basically forces WaMu to sell to JPMorgan. JPMorgan ended up purchasing WaMu for $1.9 billion, to give you some idea of the company's net value.
forklift operation - that's a good start for a bad analogy
You have a forklift. There is something to lift. You know it's too heavy, but if you lift it, the payoff is huge. Your bosses know it's too heavy, but they have convinced people with money to bet on you, claiming that your forklift can do it. People with money bet on it, knowing it's a good payoff and they trust your bosses.
Your first time goes well. Next thing you know, the same heavy lifting occurs on a daily basis, each time doomed to fail, but each time paying off. The more people say "you know it's too heavy", the better the payoff gets. Everyone gets rich on a bad bet
One day, your forklift breaks down. Everyone who bet starts running the other way, but luckily your bosses have friends in high places. They get golden parachutes. You and everyone else gets a golden shower.
BELLY UP! to the table! mmmmm
FLEA
emma:Shows what I know. I woulda figured you'd at least end up with a quarter of a share of JPMorgan/Chase. :-) So you're selling (have sold) half the Wachovia you bought at $3, right?
FLEA ADVICE: re: the noose. You'll be worth more dead in 6 months, wait it out. Lise - make sure he has an electric oven and a first floor window. At least until May
(edited by RYDER FAKIN on 26.9.08 1801) Demonstrations are a drag. Besides, we're much too high
Shows what I know. I woulda figured you'd at least end up with a quarter of a share of JPMorgan/Chase. :-) So you're selling (have sold) half the Wachovia you bought at $3, right?
Originally posted by RYDER FAKINforklift operation - that's a good start for a bad analogy
You have a forklift. There is something to lift. You know it's too heavy, but if you lift it, the payoff is huge. Your bosses know it's too heavy, but they have convinced people with money to bet on you, claiming that your forklift can do it. People with money bet on it, knowing it's a good payoff and they trust your bosses.
Your first time goes well. Next thing you know, the same heavy lifting occurs on a daily basis, each time doomed to fail, but each time paying off. The more people say "you know it's too heavy", the better the payoff gets. Everyone gets rich on a bad bet
One day, your forklift breaks down. Everyone who bet starts running the other way, but luckily your bosses have friends in high places. They get golden parachutes. You and everyone else gets a golden shower.
BELLY UP! to the table! mmmmm
FLEA
Considering Barney Frank is one of the powerbrokers of the plan, I'm sure someone who ran a business from his residence would charge you extra for the shower. We're all screwed. Time to start learning Chinese.
Originally posted by RYDER FAKINFLEA ADVICE: re: the noose. You'll be worth more dead in 6 months, wait it out. Lise - make sure he has an electric oven and a first floor window. At least until May
(edited by RYDER FAKIN on 26.9.08 1801)
If he's dead he can't complain about it. I'm not worried about him. :)
Bah. I lost $3k. It sucks ass. I should have made $1k.
I hate it when I'm right. I figured out what was going on after the markets closed, but I thought there was no way the republicans would screw this up in an election year.
http://www.news-gazette.com/news/local/2008/11/26/some_in_danville_cry_foul_over_high_school_basketball_cuts All the players left on the team are African-American.